Open Source: FBI arrest in Mount Vernon part of 7-figure cryptocurrency theft case

MOUNT VERNON — The Federal Bureau of Investigation arrested a man in the parking lot at Lowe’s Home Improvement on Saturday afternoon in an alleged money laundering conspiracy case dating back to September 2023.

The Knox County Sheriff’s Office and Mount Vernon Police Department assisted the FBI with arresting an individual named Lin Kai at the 1010 Coshocton Ave. retail outlet, Mount Vernon Police Chief Robert Morgan said Monday.

Morgan said he was notified of the arrest plan on Friday.

Lin Kai was initially booked into the Knox County Jail on Saturday, Jan. 19 on a theft without consent charge.

Kai was transferred out of the jail Monday morning, Knox County Sheriff David Shaffer said Tuesday.

Kai’s case is now in the Northern District of Ohio, assigned to Magistrate Judge Amanda Knapp.

Kai’s next court date is Jan. 30.

A desire to go hunting in Africa

The probable cause for the case begins with a 68-year-old resident of Holmesville, written by FBI special agent Jonathan Joyce.

The narrative states:

Starting in late August or early September 2023, Victim-1 started to receive communication requests from an unknown individual using the name Caitronia Lee via Facebook, the narrative states.

Victim-1 responded to the Facebook request and Lee began messaging with Victim-1 about Victim 1’s desire to hunt wild animals in Africa.

While messaging back and forth, Lee offered Victim-1 an investment opportunity to make a significant amount of money so he could fulfill his dream of hunting wild animals in Africa. Lee offered to be an investment partner with Victim-1 as well.

Lee continued to have conversations with Victim-1 and requested they use the encrypted phone application owned by Meta “What’s App.”

Lee also requested Victim-1 download a crypto current phone application on their phone called “crypto.com.” While inside the app the name displayed was Indoda-x, not crypto.com.

According to the probable cause document, it is the affiant’s knowledge and experience in these fraudulent schemes, that bad actors will create similar email addresses, names, websites, and downloadable phone applications to give the appearance to a potential victim that they are accessing the actual website, business, or cryptocurrency exchange website or interface for their investment.

Furthermore, the fraudulent website or interface appears to mirror the legitimate website or business, however, the money the victim eventually invests is not going to the actual company, but fraudulently going to the bad actors causing the victim to lose their money.

The bad actors have control of the website or phone application and have the ability to reflect the victim’s investment and fraudulently inflate the balance of the account to further influence the victim to invest more money.

The company, Indoda-x, is a legitimate cryptocurrency exchange located in Indonesia, however, a review of the screenshots of Victim-1’s phone reveals that the downloaded phone application is Indoda-x.

How cryptocurrency became part of the scheme

Victim-1 was instructed to deposit United States legal tender with the utilization of a “service director” who worked at the cryptocurrency application business. Victim-1 began to communicate with a WhatsApp number related to conducting several United States currency deposits.

Then on or about Sept. 1, 2023, Victim-1 sent a WhatsApp communication to the service director asking if there were offline transactions support in the United States. The service director responded the platform would accept “face-to-face cash transactions.”

Victim-1 then asked if the transactions could be completed in Ohio. The service director said yes, but they would need one to two working days in advance.

On or about Sept. 25, 2023, Victim-1 sent a WhatsApp message to the service director stating their desire to buy a cryptocurrency by setting up an appointment with a merchant to complete a face-to-face transaction with a deposit of $100,000.

Then the service director asked for Victim-1’s address and phone number. They provided the address of the Mount Vernon Lowe’s Home Improvement along with his phone number. He also asked for further information on the upcoming transaction.

The service director said upon the transaction, the merchant would contact the platform to inform them that Victim-1’s cash deposit was handed over. The service director explained the merchant would stay with Victim-1 until the deposit was reflected in Victim-1’s digital phone application.

The service director also provided a picture of a United States one-dollar bill with the serial number F36646005G and explained that the merchant would come to the face-to-face meeting with this exact one-dollar bill.

The service director instructed Victim-1 to write the date and amount of the deposit on the dollar bill during the cash deposit.

How Lowe’s became a meeting point

On Sept. 27, 2023, Victim-1 parked in the parking lot of the Mount Vernon Lowe’s stated an individual approached Victim-1’s vehicle and Victim-1 provided the individual $100,000.

Victim-1 was provided a United States $1 bill matching the same serial number mentioned previously. Victim-1 wrote the date and amount of the cash deposit of $100,000 and sent the picture to the service director.

Victim-1 reviewed the downloaded crypto currency application on his phone and the deposit of $100,000 appeared in the account of Victim-1. The merchant walked away and left the parking lot in a vehicle.

On or about Oct. 17, 2023, Victim-1 contacted the service director to conduct an additional deposit of $277,000 in another face-to-face cash deposit with a merchant. This time Victim-1 wanted to deposit an additional $277,000 in $100 United States bills.

The two met and made a successful transaction similar to September.

According to the report, Victim-1 met with a merchant for similar transactions three different times.

With investments growing, Victim-1 wanted to withdraw some of his investments and put them into his personal banking account, which was connected to the cryptocurrency app.

When the funds weren’t sent to his financial institution as requested, Victim-1 became concerned and contacted the service director. He sent a screenshot to the service director of his investment reaching $15,180,500.80.

The service director asked for his account number and was provided a screenshot of it. The service director responded to Victim-1 stating “Your withdrawal did not pass the review of the blockchain center and was carried out using a large amount of mixed funds. Investment, triggering the anti-money laundering risk control system and your cryptocurrency cannot be transferred.”

The service director then required Victim-1 to provide transfer information related to Lee’s purported $2.4 million investment that was invested from China into the downloaded cryptocurrency account created by Victim-1.

Without being able to provide additional documentation about the $2.4 million investment, Victim-1 requested additional assistance from the service director to withdraw his total investment. The service director responded, “You can only remove the account risk control problem through the capital verification process.”

How the Holmes County Sheriff’s Office got involved, then the FBI

Victim-1 then asked the service director if he added $2.4 million into the account within the next few days would all the funds be transferred into his financial institution account based in the United States.

The service director confirmed by adding $2.4 million into the account, Victim-1 would receive a refund from the investment.

This is when Victim-1 realized he might be part of a financial scam. He filed a police report with the Holmes County Sheriff’s Office.

Victim-1 asked the service director if there was a merchant available for a face-to-face deposit of $120,000. The service director confirmed there was a merchant available. However, he required more than $300,000 to conduct a face-to-face deposit.

On Jan. 18, 2024, the FBI obtained approximately $1,250,000 in counterfeit funds with the intent to conduct a controlled delivery of the funds to the purported merchant for the cryptocurrency phone application.

Victim-1 sent photographs of the FBI-obtained counterfeit funds along with the $120,000 controlled funds to the service director and requested a face-to-face deposit with a merchant for $1.5 million.

The service director responded to Victim-1 asking if the face-to-face deposit would occur at the same location as before. The service director initially requested the face-to-face deposit to be split due to the large amount being deposited.

The service director responded to Victim-1 and said via text message there would be a one-time transaction for $1.4 million and the service director would provide the merchant’s phone number.

The number was provided as well as a United States $1 bill with the serial number G75297833E.

The arrest

According to federal court records reviewed by Knox Pages, FBI agents observed a dark-colored Toyota Highlander XLE AWD bearing New York registration driven by an Asian male individual, later identified as Kai.

“Victim 1 was provided a United States single $1 bill. Victim-1 wrote the date and $1.4 million on the Unites States single-dollar bill and took a photograph of it. Victim-1 sent a picture of the United States single-dollar bill and provided it to the service director,” according to court records.

“Victim-1 then reviewed his cryptocurrency phone application and observed the deposit reflected into his account. Kai took pictures of the FBI-controlled funds and upon the completed transaction in Victim-1’s account, Kai exited the Victim-1’s vehicle,” according to court records.

Court documents also state Kai exited the driver seat of the Toyota and entered the passenger front seat of “Victim-1’s,” vehicle. Law enforcement recorded the conversation with Victim-1 and Kai.

Also, Kai re-approached his vehicle, opened the rear driver-side door and placed the bag of $1.4 million of FBI-controlled funds into the vehicle. Kai was then approached by law enforcement officers and placed into custody.

Records also state Kai was searched and an iPhone, two sim cards, and a driver’s license were located on Kai’s person.

Court documents also found during a search of the subject’s vehicle, FBI agents recovered the $1.4 million of controlled FBI funds and a tracking device from it. While KAI was in custody, he was interviewed and told by FBI agents that he was directed by another individual to pick up a package from Victim-1.

Documents also showed Kai was picking up a package for the other individual’s business, however, did not know what the other individual did as a business.

Kai would be given a cellular phone in his mailbox and would be provided instructions to pick up a package from Victim-1, noting Kai had picked up money from Victim-1 three times, and each time the package contained money. Kai had never picked up anything other than money from Victim-1.

Also according to court documents, Kai was instructed by another individual upon receiving the package from Victim-1, that he was to destroy the sim card in the iPhone and to replace it with one from his pocket.

Kai after replacing the SIM card and after receiving the package, was instructed to drive for the next 30 minutes to an hour and then exit the road and call the other individual.

And the other individual would arrange for another person to pick up the package from Kai. Kai stated he received $2,000 for picking up each package from Victim-1.

According to FBI public affairs officer Susan Licate, the FBI was conducting court-authorized law enforcement activity and frequently works side-by-side with local law enforcement.

“I am unable to provide details beyond what you’re already aware of and available in public records,” Licate said.